I’ve got a piece in this morning’s National Review Online on some of the ironies of the Spitzer scandal, which recalls echoes of the former prosecutor’s own “imperial CEO” rhetoric and may hinge on a crime — the “structuring” of cash transactions — whose enactment was very much part of the trend toward more ferocious white-collar law enforcement that you might call Spitzerization. (Walter Olson, “Saving Spitzer”, Mar. 11). P.S. I’ve also rounded up a lot of web coverage of the scandal over at Point of Law.
Posts Tagged ‘scandals’
Spitzer and “structuring”
A helpful reader sends along the following information about the offense of “structuring”, which federal investigators are reportedly looking at closely in connection with the Spitzer affair:
If Spitzer structured cash transactions to evade reporting requirements, he may be guilty of a felony. 31 U.S.C. 5324 prohibits certain actions by any person who acts with the purpose of evading the reporting requirements of Section 5313 (Currency Transaction Reports). The definition of structuring for purposes of currency transaction reporting is found at 31 C.F.R. 103.11(gg). The elements of the structuring regulations are:
A person acting alone, in conjunction with others, or on behalf of others,
Conducts or attempts to conduct,One or more transactions in currency,
In any amount,
At one or more financial institutions,
On one or more days,
For the purpose of evading the reporting requirements of 31 C.F.R. 103.22 (requiring CTRs).
The definition is specifically written to include those transactions which occur beyond a single business day and transactions which are conducted through more than one financial institution, but only if the purpose of the transaction(s) is to evade the reporting requirements.
The reader adds: “The IRS Manual on the BSA structuring provisions is here.”
More: Kerr @ Volokh, WLS @ Patterico, Daniel Gross @ Slate , Mark Steyn (“Almost every white-collar federal offense – wire fraud, mail fraud – boils down to ‘paying for the train ticket'”), American Lawyer, ABC News, as well as my new piece @ NRO.
Yet more, from Eric Turkewitz: “It seems likely that an amount in excess of $10,000 must be at issue if this is what was being investigated, which means more of a mess than Eliot already has. And to tickle the bank to act, it may be a sum well in excess of that amount, because I wouldn’t think an investigation would be opened if they simply saw two transactions of, say, $6,000 each a few days apart. There could be substantially more at play here.”
Client 9 from outer space: Spitzer news open thread
You know you want to discuss it, so go ahead (news reference).
Anonymous jury in Scruggs trial
Judge Biggers grants the prosecution’s unusual request, citing not only media coverage and its potential to subject jurors to “intimidation or harassment”, but also the “past attempts by the defendants to interfere with the judicial process”. (Patsy Brumfield, “Scruggs-Backstrom Case: Jurors will be nameless, for both sides”, Northeast Mississippi Daily Journal, Mar. 6; Folo and more; Rossmiller; order in PDF format).
Torkelsen Lerach scandal, cont’d
Turns out when Bill Lerach cut his plea deal with the feds, they not only agreed to spare him prosecution on other matters, but also agreed not to press charges against former Milberg lawyers (and current Coughlin Stoia partners) Patrick Coughlin and Keith Park over their dealings with Torkelsen. Another sign, perhaps, that Lerach managed to cut himself and his circle a good deal in the plea negotiations. (WSJ law blog, Mar. 6; earlier).
The Hess Kennedy “Legal Debt Center” scheme
According to a lawsuit filed by Chase, two Coral Springs attorneys are scamming their clients by promising to eliminate their debts, and then diverting debt payments for legal fees to file meritless lawsuits challenging credit card debts. The attorneys general of Florida, North Carolina, and West Virginia are also involved, and the Florida bar has moved to suspend the license of Laura Hess. “Defendants’ ulterior goals are to extract fees from card members who should be paying the money to Chase to satisfy their debts and to maliciously harass Chase in an improper (albeit unsuccessful) attempt to coerce the elimination of their clients’ legitimate debts.” (Bud Newman, “Chase Bank Accuses Florida Law Firms of Running Debt-Relief Scam”, Daily Business Review, Mar. 6).
Update: See also Mar. 6 Business Week; on-line at the self-reported Rip-Off Report; and WATE (Tennessee), Apr. 2. “‘The programs typically require financially strapped consumers to pay fees up front, so they make money whether or not any useful services are performed,’ says Philip Lehman, an assistant attorney general in North Carolina.”
Scruggs scandal update: sweet potatoes by the acre
Some developments of the past ten days or so:
* In major blow to defense, Judge Biggers denies motions to suppress wiretap evidence and evidence of similar bad acts [Rossmiller]
* Balducci says he and Patterson got $500K from Scruggs to influence AG Hood to drop indictment of State Farm, motive being to advance civil settlement [Folo]
* WSJ gets into the act with some highlights of wiretap transcripts [edit page; earlier here]
* Sen. Trent Lott says he’s a witness, not a target, of federal investigation [Anita Lee, Biloxi Sun-Herald]
* Scruggs off the hook on Alabama criminal contempt charge [WSJ law blog, Rossmiller, Folo]
* “Mr. Blake has served for many years as a conduit and a layer of separation, if you will, between Mr. Scruggs and other people on sensitive issues.” (Balducci transcript highlights, Folo; more)
* In effort to get Zack Scruggs indictment dismissed, his lawyers dwell on switch from “y’all” to “you” as implying shift in persons addressed from plural to singular [Folo first, second; Rossmiller first, second; on a “sweet potatoes” point, NMC @ Folo and sequel; also]
* DeLaughter/Peters branch of scandal reaches deep into Jackson legal community [Adam Lynch, Jackson Free Press]
* Article in new American Lawyer notes that Scruggs’s ambitious suits have lately hit a big losing streak, notably those against HMOs, nonprofit hospitals and Lehman Brothers [Susan Beck]. And Lotus catches an interestingly lawyerly wording on John Keker’s part [Folo]
* I’m quoted and this site is discussed in an article on blog coverage of the case; my lack of clarity as an interviewee probably accounts for Scruggs being said to have addressed audiences at the Manhattan Institute “a few” times, when if memory serves the correct reference is “twice”. [Patsy Brumfield, Northeast Mississippi Daily Journal (Tupelo) @ Folo]
* For more background see our Scandals page; also YallPolitics.
Special master: Coughlin Stoia paid for “stolen” Coke documents
Do they often do business this way? The law firm of Coughlin Stoia, known as Lerach Coughlin before the departure of now-disgraced Bill Lerach, has been vying for lead counsel status in a shareholder class action against Coca-Cola. Now Roger Parloff at Fortune “Legal Pad” (Feb. 28) reports that a special master on the case has recommended that the firm be disqualified for “extremely troubling” conduct which it then defended after exposure using “pretextual” arguments. It seems two former Coke executives approached the law firm of Milberg Weiss (predecessor before its split of Coughlin Stoia), one of them in possession of more than 3,000 company documents he’d taken on departure, many stamped “confidential”. The law firm then agreed to pay the execs at least $75,000 to serve as “consultants”, part of the deal consisting of access to the documents, which it then used in its complaint.
When the consulting agreement came to light more than a year ago, Coughlin Stoia lawyers backed [Greg] Petro’s claim that neither he nor they had thought he was taking Coke documents without authority because, among other things, Petro had been ordered, when terminated, to “clean out his office.” Special Master [Hunter] Hughes found that such a command could not “rationally be construed to authorize Petro to walk off with company documents, any more than it authorized him to take the company’s desk, chairs, and computer.”
Hughes also rejected arguments that the firm was not really buying the documents, just entering into a consulting agreement, and a public-policy style argument that Petro’s conduct should be condoned because he was a whistleblower trying to expose corporate wrongdoing.
In a footnote, Hughes found that public policy arguments weighed in the other direction: “On a very practical level, for the Court to give Plaintiffs’ counsel a pass on this conduct, would simply invite terminated employees, particularly of public companies, to on a wholesale basis remove company documents following their termination in hopes they can sell them should the company be sued.”
More: San Diego Union-Tribune, ABA Journal, WSJ law blog (where several comments defend the law firm’s conduct).
Milberg expert Torkelsen pleads guilty to perjury
This looks pretty major, pattern-and-practice-wise:
John B. Torkelsen, a former expert witness for Milberg Weiss, has agreed to plead guilty to perjury, admitting he lied to a federal court judge in a securities class action case about how he was getting paid.
Prosecutors in the Milberg Weiss case have been eyeing Torkelsen for years.
I wonder whether this will put a crimp in the image rehabilitation op-ed stylings of Bill “My Only Sin Was To Love the People Too Much” Lerach. The implications could ripple out to other class-action firms as well: “In an announcement about the plea agreement on Thursday, prosecutors claim that Torkelsen was retained by several firms” and that the other firms engaged in misbehavior akin to that of Torkelsen’s handlers at Milberg. (Amanda Bronstad, “Former Milberg Weiss Expert Witness Agrees to Plead Guilty to Perjury”, National Law Journal, Feb. 29). Our earlier coverage of Torkelsen is here.
Scruggs wiretap transcripts, cont’d
Alan Lange and commenters are jumping in to excerpt some of the more damning excerpts (YallPolitics Feb. 19; more). And in the department of curious wordings, from the Jackson Clarion Ledger: “Circuit Judge Bobby DeLaughter has told federal authorities he became aware in 2006 that some people were trying to improperly influence him to rule in favor of lawyer Dickie Scruggs in a Hinds County legal-fees dispute. DeLaughter told authorities he didn’t know whether he was influenced [emphasis added] but says he’s followed the law in all his rulings.” (Jerry Mitchell, “Judge: Efforts to sway made”, Feb. 24).